Apple’s mixed quarterly results have sparked some concerns that the company’s exorbitant growth rates could be poised to slow. For now, though, analysts say the positives in Apple’s results outweigh the negatives.

“The investment community tends to get ‘wrapped around the axle’ on tertiary details and fails to forget the ‘big picture,’” says Brian Marshall, a technology analyst at ISI Group. “Demand for Apple products is much greater than current supply.”

Shares edged up 0.4% to $612. The stock is down about 13% since hitting a record high above $700 last month, although shares are still up more than 50% for the year.

In July, Apple also reported a rare earnings disappointment as lower-than-expected iPhone sales hurt the bottom line. The stock dropped, but it recovered in the weeks that followed amid hype surrounding the iPhone 5 release.

Apple, the world’s biggest company measured by stock-market value, said it sold 26.9 million iPhones in its fiscal fourth quarter, up 58% from a year ago and above analyst expectations.

Marshall predicts iPhone sales could get even better over the next six months as iPhone 5 demand increases and supply constraints diminish. It’s a period he deems the “180 Days of Enlightenment” following an iPhone launch. Historically, Apple has seen iPhone sales rise sharply in the six months following the launch of a new device.

Apple CEO Tim Cook acknowledged yesterday on a conference call with analysts that supply constraints hurt the company’s results. “We are in a significant state of backlog right now,” he said, while noting Apple’s output has “improved significantly since earlier this month.”

Analysts say supply issues may also have played a role in Apple’s lower-than-expected quarterly guidance. “We suspect that Apple’s December quarter revenue guidance is more a reflection of the company’s ability to supply products rather than demand,” says Charlie Wolf, an analyst at Needham & Co. “We would not be surprised if Apple exits December with material backlogs in both iPhone 5 and the iPad.”

With regard to the iPad, some analysts are concerned with how Apple will be able to maintain margin growth, especially as the company sells its new iPad Mini alongside the existing full-size iPad.

“Lower gross margins will be the key focus for investors; we view near-term pressure as transitional but also partly secular,” says Bill Choi, an analyst at Janney Capital Markets, as the company’s cheaper iPhones, iPads and iPad Minis should help expand its market appeal.

Apple said it sold 14 million iPads, which fell below many analysts’ predictions. The company unveiled the iPad mini earlier this week. “While there may be controversy with the light iPad [sales], we believe concerns are overdone,” says Shaw Wu, an analyst at Sterne Agee. “There was clearly a customer pause ahead of the iPad mini as it was arguably one of the worse kept secrets out there.”

As is always the risk, the top concern for Apple shares over the short- and long-term is whether the company will be able to stay at the top of its industry while competitors such as Google Inc.Microsoft and Amazon.com Inc. continue innovating.

“The lingering risk in the Apple story is that the company may no longer innovate at the same pace and with the same disruption that characterized the Steve Jobs era,” Needham’s Wolf said. “Demand in the first quarter could help to allay the risk of such an event.”

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Comments (5 of 11)

Strange how the "analysts" never take any responsibility for misreading the data. Not just Apple but any company. Somehow we're supposed to accept that these people who do not have all or even most of the data available to them are to be accepted as the arbiters of success and failure. Then, when the analysts completely miss on their "analysis", it's the company's fault? Ridiculous.

Instead, analysts and investors should be looking at the hard facts: year over year, not quarterly (because pretty much everything is seasonal, yoy balances that out). Any person actually concerned with real facts would be very pleased with the great progress by Apple in pretty much every category year over year. Same holds true for any company that makes strong yoy gains.

Second, the haters always reveal themselves as poorly informed and blinded by their bias when they jump in with their usual drivel trying to propagandize their current fave. Posting things on the internet doesn't make them true and only a dullard would actually believe that posting outrageous lies sways anyone to think anything beyond "are these people really that stupid or are they just paid to be that stupid?" Of course, their usual typing errors always raise the question: if their tech is so great, why can't they handle even simple spell checking and if they are so smart, how come they make so many mistakes?" Answer: they really aren't smart at all.

4:14 pm October 26, 2012

Responsible_and_Ethical wrote :

I totally disagree with Jar1807.

It is precisely this sort of vague, emotional and herd instinct that hurt small investors.

Investing is not trading. Investing is not about who loves who. INvesting is about looking at bottomline. It has always been that way, it will always be that way. AAPL has seen such corrections many times before. THose of us who have been tracking it sees the pattern repeats over the past 10 years.

24 months ago, when the shares remained range-bound between $300-$400, the chorus of "dead money", "peak is over" and "lost is shine" got exceedingly loud. Today, based on sales, profits, product refresh and concrete demands, the share is at $600. THose who sold, as Jar1807 is advising, would have lost 50%-100% gain.

Forget about EMOTION and LIKE and DISLIKE, look deep into the product strategy, product competitiveness, sales, revenue, profit, understand the competitive landscape, understand the key competitors and make your own decisions.

1:42 pm October 26, 2012

Anon wrote :

I agree with jar1807. Remember, before the iPhone, nobody complained about their Blackberry. People loved their BB's (hard to remember that far back, but it was true), the company had/has a pile of cash and they had dominant market share. Amazing how fast competition evolves in technology. Don't be too wed to the past - in technology it's all about "what have you done for me lately".

1:02 pm October 26, 2012

jar1807 wrote :

If you own AAPL sell now. Reason: it doesn't matter how good the numbers are from here on. That's because there's an interesting phenomenon I've watched in the tech industry from my days at Xerox many years ago and that is: people LOVE to hate the big guy like XRX, IBM, MSFT, CSCO, ATT and now AAPL. So, when the slightest leak in moat occurs they gather courage and bail. Even if this is a false feeling, its NOT stoppable. Note all the recent negativity you hear ad nauseum. No matter what the company announces its been picked apart as a TOTAL failure. And, you can never satisfy these pickers when there is a viable, cheaper alternative, even if not as good, in the market. The fall in stock prove despite great financials is proof of this mostly illogical but, real malaise.

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